Most of the important U.S. economic data for the month of March will not be available for a few more weeks, but we have enough to know that the pace of growth in the U.S. economy slowed noticeably in the first quarter of this year. In fact, several early analysts' estimates indicate the economy has expanded by less than 1 percent so far in 2019.
The last time real quarterly GDP growth was less than 1 percent was the fourth quarter of 2015. After that quarter, the pace of growth proceeded to accelerate steadily for the next three years. But since this is now the longest period of economic expansion any of us has ever experienced, it is understandable if a quarter of slow economic growth makes people feel anxious that we are close to the next period of recession.
One of the indicators I always use to monitor the health of the U.S. economy is the Fed's industrial production index measuring output of plastics products. If you look closely at the graph, you can see that the slope in the trend for the U.S. output of plastics products was less steep in 2015 than it had been in 2014, but it unquestionably stayed positive. At that time, I was not particularly anxious about the below-average rate of expansion in the overall economy in the fourth quarter of that year. Some volatility in the data is to be expected, and the clear upward momentum in the plastics data was reassuring.
This past year, however, the trend in plastics production was more worrisome. As a result, I am presently paying much closer attention to the trend in the overall economic data. The best way I can describe my current mindset is that I am alert but not yet alarmed.
The graph shows that production of plastics products declined in the first half of 2018 before it started to recover in the second half of last year. The amount of decline in the data was not severe, but it was more than we have seen for a while. I take some comfort in the fact that despite the decline for part of the year, the total annual output of plastics products eked out a 0.2 percent gain in 2018 when compared with the previous year.